Masse v. Board of Trustees, Public Emp. Retirement System

• Decision Date: 27 July 1981
• Citation: 87 N.J. 252,432 A.2d 1339
• Parties: Victor J. MASSE, Respondent, v. BOARD OF TRUSTEES, PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Appellant.
• Court: New Jersey Supreme Court

Page 252

87 N.J. 252

432 A.2d 1339

Victor J. MASSE, Respondent, v. BOARD OF TRUSTEES, PUBLIC EMPLOYEES' RETIREMENT SYSTEM, Appellant.

Supreme Court of New Jersey.

Argued April 7, 1981.

Decided July 27, 1981.

Robert A. Coogan, Brielle, for respondent Victor J. Masse.

Bertram P. Goltz, Jr., Deputy Atty. Gen., for Board of Trustees, Public Employees' Retirement System (James R. Zazzali, Atty. Gen., attorney; Erminie L. Conley, Asst. Atty. Gen., of counsel; Bertram P. Goltz, Jr., Deputy Atty. Gen., and William P. Malloy, Trenton, on the brief.)

The opinion of the Court was delivered by

SCHREIBER, J.

Plaintiff challenges herein the disqualification by the Board of Trustees of the Public Employees' Retirement System (PERS) of 27 years of service toward his pension. The sole question before us is whether the applicable pension statutes require that a public employee who has satisfied the age and service requirements entitling him to a pension must forfeit all the creditable service which occurred prior to his conviction for conduct involving moral turpitude, even though the conduct is unrelated to his job performance.

The facts are undisputed. Plaintiff, Victor Masse, was first employed by the Borough of Highlands in 1947, after military service in World War II. About 1950 he left his position and returned in 1952. He worked continuously thereafter for the Borough, except for a three-week period when he was suspended because of an indictment in March 1976 for impairing the morals of a minor in violation of N.J.S.A. 2A:96-3 and for contributing to the delinquency of a minor in violation of N.J.S.A. 2A:96-4. On January 31, 1977, Masse pled guilty to two counts of the indictment. A sentence of concurrent terms of one to three years on each count was suspended and he was placed on probation for a two-year period and fined $1,000.

Plaintiff was employed as an Assistant Superintendent of Water and Sewers. His duties were primarily those of a foreman in the department. He had always been an excellent employee and his record was spotless. On February 17, 1977, he applied for a pension to become effective on August 1, 1977. He was then 51 years old and had over 25 years of service credits in the Public Employees' Retirement System. Accordingly, he was qualified for "early retirement" under N.J.S.A. 43:15A-41. Masse withdrew his application in a letter dated July 7, 1977, stating his intention to remain at his job until he "reach(ed) the age for a regular retirement." Nevertheless, the Board of Trustees of PERS reviewed the application and advised Masse that he would not receive credit for any service before January 31, 1977 because that service was considered dishonorable and that he would receive credit for service rendered after February 1, 1977. The Board advised Masse to file a new enrollment application with an effective date of February 1, 1977.

Masse objected to the decision and was granted a hearing by the Division of Pensions. The Hearing Officer found it was the established administrative practice of the Board of Trustees of PERS to disallow all service prior to the date of conviction of a crime involving moral turpitude. However, service after the conviction was to be deemed honorable and credited toward the employee's pension. The Hearing Officer held that an employee obtains no vested property right to a pension, that honorable service is a condition precedent and that his entire past service becomes dishonorable when the conviction involves moral turpitude, even though the conduct is totally unrelated to public employment.

The Hearing Officer, applying these principles to Masse's case and noting that the offense involved moral turpitude, stated that it was "immaterial that Petitioner had some 31 years of service without a blemish on his record." He recommended disallowance of all service before January 31, 1977 and allowance of service thereafter. The Board of Trustees adopted the Hearing Officer's findings and recommendations.

The Appellate Division reversed. 175 N.J.Super. 325, 418 A.2d 1282 (1980). We granted the Attorney General's petition for certification, 85 N.J. 478, 427 A.2d 572 (1981), and affirm.

The key issue in this case is discernment of the legislative intent, which, in the absence of legislative history, can be ascertained only by examination of the relevant sections of the pension act and related statutes. The Public Employees' Retirement System is a legislative scheme providing pensions for qualified state, county and municipal employees. N.J.S.A. 43:15A-6 et seq. Three basic components of pension eligibility are service, compensation and age. A member of the Public Employees' Retirement System who has attained 60 years of age may retire on a service retirement allowance by filing with the System a written application, N.J.S.A. 43:15A-47. The retirement allowance consists of an annuity, which is the actuarial equivalent of deductions from the employee's wages together with interest, and a pension, which is based upon the employee's final compensation multiplied by each year of service credited to him. N.J.S.A. 43:15A-48. Final compensation is based on a three-year average. N.J.S.A. 43:15A-6(h). Insofar as service is concerned, the employee is to be credited "with the time of all service rendered by him since he last became a member, and in addition with all the service to which he is entitled and with no other service." N.J.S.A. 43:15A-39. Under certain circumstances veterans are also entitled to some additional service credits. N.J.S.A. 43:15A-60.

The central issue in this case concerns what service may be calculated toward the pension. The word "service" is not defined in the statute. The language in N.J.S.A. 43:15A-39 does not limit or describe what is contemplated by service. However, at least one section, N.J.S.A. 43:15A-41(b), dealing with early retirement, refers to "creditable" service. It is self-evident that service must refer to the work performed and the responsibilities assumed by the employee for which he receives compensation. Thus, to be creditable service would require at least employee performance.

None of the provisions in this pension statute requires that the service be honorable. Some pension statutes, such as those involving policemen and firemen, N.J.S.A. 43:16-1, expressly require that the service be honorable in order to be creditable. We perceive no basis for the distinction between the two classes of statutes. Indeed none has been suggested. Accordingly, we are satisfied that the Legislature must have intended honorable performance as a component of creditable service. See Ballurio v. Castellini, 29 N.J.Super. 383, 102 A.2d 662 (App.Div.1954) (court observed only nine of sixty pension statutes required honorable service, but finding no rational distinction concluded "honorable service is implicit in every such enactment").

It is necessary to define dishonorable service and consequently noncreditable time served. All other conduct and term of service would be honorable and creditable. Since the issue in this case concerns misconduct unrelated to the public employment, our analysis will be directed to that situation. Our inquiry will thus focus upon whether misconduct involving moral turpitude in a nonwork-related capacity causes some or all of the service rendered efficiently and well for the government to become noncreditable.

Where the misconduct related to the public employment that was the basis for the pension service, it has been held that a conviction arising out of that situation tainted the service causing loss of a possible pension. See McFeely v. Board of Pension Commissioners, 1 N.J. 212, 62 A.2d 686 (1948) (retired police chief's pension vacated pending disposition of indictment for nonenforcement of gambling statutes and conspiracy to "oppress" and "persecute" other members of the police force); Plunkett v. Pension Commissioners of Hoboken, 113 N.J.L. 230, 173 A. 923 (Sup.Ct.1934), aff'd o.b., 114 N.J.L. 273, 176 A. 341 (E. & A. 1935) (fireman's pension forfeited upon his conviction on charges of misconduct in violation of departmental rules, including embezzlement of firemen's relief association funds); Mount v. Trustees of Pub. Emp. Retirement Syst., 133 N.J.Super. 72, 335 A.2d 559 (App.Div.1975) (retired county engineer's pension suspended pending disposition of indictments for extorting money from a contractor and filing false income tax returns during his employment); Hozer v. State, etc., Police & Firemen's Pension Fund, 95 N.J.Super. 196, 230 A.2d 508 (App.Div.1967) , certif. den., 50 N.J. 285, 234 A.2d 395 (1967) (policeman's pension application denied where convicted of nonfeasance in office); Fromm v. Bd. Directors of Police, etc., Retire. Syst., 81 N.J.Super. 138, 195 A.2d 32 (App.Div.1963) (policeman's service-related disability pension benefits terminated upon his conviction for altering and downgrading traffic tickets); Pfitzinger v. Bd. of Trustees, etc., Retirement System, 62 N.J.Super. 589, 163 A.2d 388 (Law Div.1960) (highway department inspector's pension application denied upon proof of numerous counts of misconduct in office, including extortion).

The concept that conviction of a crime involving moral turpitude related to the employment taints all the past service of an employee assumes a nexus between the dishonorable conduct and the public employment. The rationale supporting this proposition is that public employment encompasses a public trust which, inter alia, contemplates that the public employee will not denigrate the performance of that employment. See Driscoll v. Burlington-Bristol Bridge Co., 8 N.J. 433, 474, 86 A.2d 201 (1952), cert. den., 344 U.S. 838, 73 S.Ct. 25, 97 L.Ed. 652 (1952); Pfitzinger v. Bd. of Trustees, etc., Retirement System, 62 N.J.Super. at 602-03, 163 A.2d 388. This is consonant with the underlying precept that there is a fiduciary relationship between employer and employee,...